Screening of Foreign Direct Investments in Sweden from 1 December 2023
Sweden has a new Foreign Direct Investments (‘FDI’) Screening Mechanism
As of 1 December 2023, the act on foreign direct investments (the “FDI Act”) is in force. The purpose of the FDI Act is to prevent foreign direct investments that may harm national security, public order or public safety in Sweden. The FDI act catches investments that close from that day onwards. Thus, investments that have already been signed but with long-stop dates after 1 December are also targeted.
The new regime – where notification is mandatory also for Swedish and EU investors and for minority investments in certain sectors – has a very broad scope and will no doubt impose an additional administrative burden on many transactions and investments (including green field investments) in Sweden, causing delays in closing times. The rules apply to e.g. mergers, acquisitions and minority investments in companies, trusts and other legal entities domiciled in Sweden.
Deals covered by the FDI Act are surrounded by uncertainty as they risk being prohibited or cleared subject to conditions. In addition, non-compliance with the new rules can lead to hefty fines, prohibitions and forced divestitures.
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